Amazon.com (NASDAQ:AMZN) ranks second on our list of President Trump and Nancy Pelosi Portfolio: Top 4 Picks.
Many elite money managers and billionaires were also piling into the stock earlier this year. Bill Ackman’s Pershing Square wrote about Amazon in its second-quarter letter, and we covered the two stocks that Nancy Pelosi and Bill Ackman are both betting on.
Bull Case: Amazon Earns From Every AI Lab
Amazon can profit whichever AI lab wins because AWS sells computing power to all of them. Anthropic committed in April to a ten-year spending plan on AWS that includes up to five gigawatts of new computing capacity. Anthropic also works with Amazon’s Annapurna Labs to design future Trainium chips. Amazon signed a strategic deal with OpenAI in February that includes an investment commitment and Trainium capacity. That gives AWS two of the biggest AI customers at the same time. AWS revenue grew 37% in the second quarter, its fastest pace in years.
Amazon also has a place to use AI itself. It has deployed one million robots in its warehouses, and gains found in one fulfillment center can be used across the rest. AWS is the main cloud provider for robotics maker NEURA Robotics, so Amazon earns from robots it does not build.
What Big Investors Are Doing
Stanley Druckenmiller’s Duquesne Family Office raised its Amazon stake by 1,083% in the second quarter. Amazon is one of the stocks on our list of 10 Best AI Stocks to Buy According to Billionaire Stanley Druckenmiller. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital is the largest holder as of Q2. It owns about 40.3 million shares worth $9.62 billion, which is 4.27% of its portfolio. It raised the position by 24%. Ken Fisher’s Fisher Asset Management is second with about 35 million shares worth $8.34 billion, or 2.48% of its portfolio, and it added 3%. Brandon Haley’s Holocene Advisors is third with about 14 million shares worth $3.34 billion. That is 7.53% of its portfolio, and the stake grew 7%. Cliff Asness’s AQR Capital Management ranks fourth with about 11.9 million shares worth $2.84 billion, or 0.99% of its portfolio, up 26%.
Photo by Dimitris Chapsoulas on Unsplash
Bear Case
Amazon is spending so much on AI data centers that its trailing 12-month free cash flow turned negative. L1 Capital expects AWS spending to keep free cash flow under pressure, but it says the market focuses too much on near-term cash flow. Here is why the fund stays optimistic. AWS could also grow and still lose share to Microsoft and Google. Reported profit in the second quarter included a large one-time gain on Amazon’s Anthropic stake, so it overstates the core business. Some investors also worry that personal AI agents such as Meta’s Muse could pull shoppers away from Amazon’s site.
Valuation
On forward non-GAAP earnings, the stock trades at about 31 times, more than double the sector median of about 15 times. Analysts expect earnings per share to grow about 16% in 2026 and about 26% in 2027. Revenue is forecast to grow about 16% in 2026 and about 15% in 2027. The forward PEG ratio, which pairs the P/E with growth, is 1.48 against a sector median of 1.24, so the premium looks smaller once growth counts. Analyst consensus rates the stock a Strong Buy. Read the full valuation case here.
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